Inequality and Catholic Social Teaching

Over the past few years, there has been a welcome renaissance in the economics of inequality. This stems from a huge rise in inequality over the past 30 years or so, especially marked in the US, but also in evidence elsewhere. This rise followed a sequence of policies that were geared to boost long-term growth and productivity – policies such as lower taxes, less progressivity in the tax code, curbing the power of unions, deregulating the financial sector. We know the outcomes by now – long-term productivity did not change, but inequality rose sharply. Another way of saying this is that the benefits of growth and productivity, instead of being shared widely as in the postwar period, instead accrued to the top echelons of society.

The consequences of this are clear. A more unequal economy is a more unstable economy, as we saw with the financial crisis and ensuing Great Recession. A more unequal society is a more unstable society, as we see with eroding trust, increasing division between people, and rising political dysfunction in places like the United States – factors which tear at the social fabric that binds society together. Fundamentally, more equal societies are associated with lower poverty and more opportunity. We have evidence that economic growth is stronger in more equal societies.

Some people would go much further. In a fascinating book called The Spirit Level, Richard Wilkinson and Kate Pickett blame inequality for a whole host of economic and social problems – high infant mortality, low life expectancy, criminality, the prison population, mental illness, unemployment, low social mobility, poor educational outcomes, obesity, malnutrition, teenage pregnancy, child well-being, illegal drug use, violence, economic insecurity, personal indebtedness and anxiety. Some say this goes too far, and perhaps it does, but clearly, as a society gets more unequal, it gets more unwell.

Fundamentally, it is hard to disagree with historian Tony Judt, who concluded that:

“Inequality is corrosive…it rots societies from within…it illustrates and exacerbates the loss of social cohesion…the pathology of the age and the greatest threat to the health of any democracy“.

We should also remember the words of John Maynard Keynes, who ended his magnum opus, The General Theory of Employment, Interest, and Money, with the following observation:

“The outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes“.

That was a long time ago. Right now, inequality is back in fashion. But it never really went out of fashion in Catholic social teaching. This follows naturally from its emphasis on social harmony between the different classes, the importance of distributive justice and the universal destination of goods, and the role of the government in aligning private outcomes with the common good. It follows from the clear principles of solidarity, subsidiarity, and the preferential option for the poor.

I will let the teaching speak for itself:

Pope Pius XI:

“Therefore, the riches that economic-social developments constantly increase ought to be so distributed among individual persons and classes that the common advantage of all… one class is forbidden to exclude the other from sharing in the benefits…To each, therefore, must be given his own share of goods, and the distribution of created goods, which, as every discerning person knows, is laboring today under the gravest evils due to the huge disparity between the few exceedingly rich and the unnumbered propertyless, must be effectively called back to and brought into conformity with the norms of the common good, that is, social justice”.

Gaudium Et Spes:

“For excessive economic and social differences between the members of the one human family or population groups cause scandal, and militate against social justice, equity, the dignity of the human person, as well as social and international peace.”

Pope John XXIII:

“Economic progress must be accompanied by a corresponding social progress, so that all classes of citizens can participate in the increased productivity. The utmost vigilance and effort is needed to ensure that social inequalities, so far from increasing, are reduced to a minimum…”

“The economic prosperity of a nation is not so much its total assets in terms of wealth and property, as the equitable division and distribution of this wealth”

Pope Paul VI:

“We cannot proceed to increase the wealth and power of the rich while we entrench the needy in their poverty and add to the woes of the oppressed…Then there are the flagrant inequalities not merely in the enjoyment of possessions, but even more in the exercise of power“.

Pope John Paul II:

“One of the greatest injustices in the contemporary world consists precisely in this: that the ones who possess much are relatively few and those who possess almost nothing are many. It is the injustice of the poor distribution of the goods and seo services originally intended for all“.

Pope Benedict XVI:

“The world’s wealth is growing in absolute terms, but inequalities are on the increase…. The scandal of glaring inequalities continues…”

“The dignity of the individual and the demands of justice require, particularly today, that economic choices do not cause disparities in wealth to increase in an excessive and morally unacceptable manner, and that we continue to prioritize the goal of access to steady employment for everyone. .. Through the systemic increase of social inequality, both within a single country and between the populations of different countries, not only does social cohesion suffer, thereby placing democracy at risk, but so too does the economy, through the progressive erosion of “social capital”: the network of relationships of trust, dependability, and respect for rules, all of which are indispensable for any form of civil coexistence”.

“Therefore, it must be borne in mind that grave imbalances are produced when economic action, conceived merely as an engine for wealth creation, is detached from political action, conceived as a means for pursuing justice through redistribution.”

So clearly, Catholic social teaching has a lot of say about inequality, and calls for a greater sharing of wealth across society and between societies. At the level of policy, this has many dimensions, including respect for collective bargaining rights, redistribution through social transfers and progressive taxation, and greater socialization of the means of production (worker ownership, profit-sharing, and worker role in management). Of course, it cannot imply collectivization of the means of production, which goes too far in the other direction. As always, Catholic social teaching is guided by prudence. There surely comes a point when policies push equality too far, in a way that harms human dignity and human freedom. But right now, the US is pushing sharply in the opposite direction, and this needs to be rectified. And here, Catholic social teaching has the answer. It has always had the answer.

You have rightly identified the problem. You have misunderstood the cause and so propose wrong solutions.

Re-distribution of wealth is NOT part of any sort of ideal solution. Wealth would not have to be RE-distributed if it were distributed correctly in the first place. And the idea of “higher wages” as any sort of solution is just laughable as this comic so aptly illustrates:http://www.michaeljournal.org/images/049–Donkey.gif

The real reason for such mass inequality among such abundance is because of how the Means of Distribution (money/credit) are created and distributed (here’s a hint: usury and debt).

If credit were treated, as it should be, as a social rather than a private good…these problems would quickly evaporate.

As long as we live in a system where an income is tied to participation in production, however, the capitalists will win.

Frank M.

MM:

Could you clarify what you mean by “long-term productivity did not change,” and perhaps indicate or link to sources? Is “productivity” value of goods produced per hour of labor, per dollar of wages, per worker (meaning longer work hours somewhat increase productivity), or something else? Looking at data from the US Bureau of Labor Statistics, it seems different sectors like manufacturing, farm, non-farm business, etc. experience different growth in productivity.

I assume you mean that the bottom line is workers are producing more for the bosses, but getting less in wages as a fraction of what they produce. No doubt the bosses would argue it is their investment in capital equipment and improvements to working conditions that has “caused” the increased productivity.

It makes intuitive sense that as “a society gets more unequal, it gets more unwell.” Has the research tried to tease out how much of the correlation is forward causation, and maybe how much is positive feedback, as in “unwell workers and resentful workers are less productive.”

http://www.patheos.com/blogs/voxnova Morning’s Minion

Yes, I mean productivity per hour or per worker. While it is still growing, this growth proved no stronger after 1980 than before 1980. If you believe traditional economic models, real wages are supposed to grow in line with productivity. But that has not happened over the past 30 years.

Kurt

Here in the United States, the most advanced economy in the world (using standard industrial classifications) about 20% of the work requires a college degree. Another 35% of the labor market is skilled labor requiring some training, such as a union apprenticeship program or community college classes. The remaining 40% of jobs are in unskilled labor or at most requiring a high school diploma and some on the job training. To be clear, this is not where PEOPLE are. This is where the LABOR MARKET is. Simply giving people more advanced education doesn’t necessarily change labor market demand.

Setting aside for now the apparently divisive question as to if workers contribute to the success of an enterprise or only the boss is the one who “builds it”, I am more concerned about what we saw in the recent situation at Caterpillar Inc. in Joliet (IL) and the practices of other employers of unskilled and semi-skilled workers.

Now, Caterpillar reported record profits of $60 billion. Its CEO makes $16.9 million. Conservatives tell us wages and benefits should be set by the free market, without interference by government or worker organization. The market seems to be orienting itself to about $25,000 in wages for manual labor, with less generous health insurance than in the past, no company retiree health insurance and a retirement plan that won’t quite provide $1K/mo.

So this is not low wage work that people do for a few years until they acquire higher education or shape up and become disciplined, reliable workers. This is what 40% of the jobs in the labor market offer and that tens of millions of Americans should expect to work at for most of their worklife.

I’m not of the centrist/Rockefeller Republican school of thought that says isn’t this a shame that these unskilled workers don’t contribute enough to the economy to merit better pay and benefits so let’s help them out. My view is that that they contribute more that what the “free market” would compensate them at. But I am truly interested in my conservative friends’ thoughts on this. Does our economy simply justly leave 2/5ths of the labor market at this level?

http://renegadetrad.blogspot.com A Sinner

Not our economy, but the monetary system.

These WAGES determined by the free market may be perfectly just. But wages should not be the only source of personal income.

Kurt

How so?

http://renegadetrad.blogspot.com A Sinner

How so are they just? Or how so would not all income be from wages?

They’re just in the sense that the purpose of Production is to produce. Production does not exist to “create jobs” or to distribute the wealth. It exists to produce the real wealth, the real goods and services. If, in the process, it distributes a wage or earns someone a profit, this is accidental to the purpose of Production in se, and is rather a means to an end.

And the free market is, economically speaking, the most efficient way to produce the most goods, actually demanded, at the least cost. Some intervention might occasionally be reluctantly necessary, but ultimately making production less efficient just to make distribution more equal is stupid, because the purpose of production is production, not distribution. Problems with distribution must be addressed by addressing distribution, not by meddling in production.

So, for example, seeing something “wrong” with replacing factory workers with robots because “people will lose their jobs” as if we should produce less efficiently just because of the effect on distribution…shows the madness of bootstrapping production and distribution like this in the first place. Besides, as the cartoon I linked to above shows, higher wages often just wind up as higher prices which then drive a need for higher wages to chase those prices ad infinitum.

As for “how” income would not be linked to production, social credit proposes that since we are all co-heirs to the enormous social capital from which credit takes its origin in the first place (all the infrastructure, the social web of civilization, all the accumulated knowledge and technology of past generations), that each year the money supply should be increased debt-free in proportion to new real production, and distributed NOT in the form of interest-demanding debts as in the current system (another madness: having to “pawn” all new production to the bankers in order for it to pay for itself) but rather as a social dividend to each citizen to keep purchasing power in line with production.

This is also balanced by a “rebate” on prices in order to stop inflation and to balance total purchasing power with the total production of prices (so that consumption can always pay for production).

The current system is absurd.

Rat-biter

““Inequality is corrosive…it rots societies from within…it illustrates and exacerbates the loss of social cohesion….”

## To quote the earthly heads of that celebrated “not a democracy” the Catholic Church would amuse anyone LOL. It is a “perfect *society*” (so Leo XIII), but its structure, though not based on equality , has not collapsed yet. So much for the quotation’s accuracy – unless only the US is in view.

Hierarchical societies haves lasted for 1000s of years – they still exist. Social egalitarianism is a superstition, a phantom, a foolish novelty that may please people as insular & ill-informed as people in the US seem to be, but it bears little relation to history. It may be valid for the US, but that is no reason for anyone to think it *must be* applicable elsewhere.

http://www.blackindianinn.com David EbonyAllen Barkley

In my humble opion all flows in cycles through thoes come redistribution; The sad thing is that our view is warped by expediency and growth. Expediency- we want everything fast (i.e.) product/profit no matter what. not seeing on to seven generation as to what the yet to be born will inherit. ( Nuclear wast, poluted water, etc….) Growth – the view is that GNP/economies must grow. So we seek growth insteads of stability- eg The rainforest is disappearing but we’re growing. Bigger is always better – Centralizing rather than Decentralizing – many small is stablizing & diversifying p.s. sorry about any miss spelling

Jordan

Rat-biter [August 21, 2012 8:37 pm] Hierarchical societies haves lasted for 1000s of years – they still exist. Social egalitarianism is a superstition, a phantom, a foolish novelty that may please people as insular & ill-informed as people in the US seem to be, but it bears little relation to history. It may be valid for the US, but that is no reason for anyone to think it *must be* applicable elsewhere.

Quite true. Hiearchy is, whether it be nomenklatura or junta. Any just system must include market economy. In this way there is nominal economic mobility, a counterbalance to fiscal stagnation, and a check against either rightist or leftist totalitarianism. Capitalism is economically inequitous at a basal level, but it is certainly preferable to the Stalinist New Man.

I still self-identify as a social market democrat. I am still convinced that a social net, both economic and medical, must exist despite its abuse by a small minority (abuse does not take away use). And still, the poison of social democracy is its not-so-implict message that the “educated” (a calque for socialeconomic mobility) suppress the less-economically-advantaged through welfare and entitlements. This is also not Christian, as no group of people should be relegated to a lower caste simply because economic viability is tilted against them unless they partake of the dole.

I agree with A Sinner that a more equitous distribution of credit might facilitate social democracy without socioeconomic stratification. I am not convinced, however, that “social credit” would not lead to another nomenclatura.

http://renegadetrad.blogspot.com A Sinner

Or, is this sort of defeatism just what the Usurers want you to think?

Power is, in large part, purchasing power. If purchasing power was created and distributed socially rather than giving the power to create credit to a private cabal that charges for something that costs them nothing at all to create out of thin-air in the first place (how our monetary policy currently works!) then I think we would find “distributism” being achieved in practice almost just automatically, as the mechanism of wealth- (and thus power-)concentration in the hands of the Few, is the usury of the current debt-money system.

Jordan

Even social credit societies contain practical usury and capitalistic substructures. Sure, a good number of Saudi men (many n-th degree relatives of the Saud family) don’t work for a salary. The American and European engineers brought in to tend the oil fields do earn salary. The indentured Filipino and African “housekeepers” and “laborers” work from compulsion. The latter practices are not only human-rights violations but also not social credit by any means.

Also, is there really any difference between taking out an interest-based loan and an “Islamic loan”? In the latter case the amortized compound interest is merely tacked onto the collateral price as a lump-sum. How is this morally different than a compound interest installment plan?

Social credit is perhaps manageable if one lives in a socially homogenous and smaller society such as an emirate. Social credit is not so manageable in a heterogenous 300 million person nation or economic union.

http://renegadetrad.blogspot.com A Sinner

I’m not sure you’re understanding social credit here, then. Social credit merely has to do with how money is created in the first place. I have no knowledge that Arab countries, in spite of their “interest free banking” and potential for a dividend based on exports of oil…actually create credit according to a social credit model. Indeed, I think it would be hard for them to do so, being part of the World System. Some quick research indicates that their money is really no different than any other in terms of its origin.

http://undeetmemores.wordpress.com Jordan

A Sinner [August 23, 2012 6:36 pm]: I’m not sure you’re understanding social credit here, then. Social credit merely has to do with how money is created in the first place.

No, I don’t understand. I have gone back to Renegade Trads and read your back posts on social credit to get a better idea of what you mean by the term.

Consider if this is pertinent: capital and personal wealth creation requires some outside risk. The abuse and excesses of this risk can be mitigated to some degree by legislation, but derivatives are (un/fortunately?) necessary. When not played like a craps table, futures markets allow for needed capital now based on later economic projection. A social credit system, which allots ownership of growth (and in turn the flexibility of consumer credit) in the hands of the consumers-producers themselves is in some respects a closed system which can’t readily stretch to meet economic fluctuations.

Leninist-Stalinist collectivist states are good examples of the ill effects of inelastic policies. Fidel Castro, Erich Honecker, and similar once set up and continue to run hard currency shops for natives and travelers alike. D-Marks at one time provided, and USD still provides, proxy capitalism as a safety-valve. Similarly, a social credit system where capital is a closed distribution system runs the risk of becoming also a closed prosperity system, This is especially true if the consumer-producers continually fail to build credit quickly.

http://renegadetrad.blogspot.com A Sinner

“A social credit system, which allots ownership of growth (and in turn the flexibility of consumer credit) in the hands of the consumers-producers themselves is in some respects a closed system which can’t readily stretch to meet economic fluctuations.”

Why do you describe it this way? Nothing about the market changes under social credit.

“Similarly, a social credit system where capital is a closed distribution system runs the risk of becoming also a closed prosperity system, This is especially true if the consumer-producers continually fail to build credit quickly.”

Why do you call it a “closed distribution” system? The only thing social credit would change is the ability of banks to create money out of thin air and then expect to paid more than the principle for, essentially, doing nothing except using their monopoly on a power (creation of money) which really belongs to society as a whole.

Jordan

A Sinner [August 24, 2012 10:48 am, transferred]: Why do you call it a “closed distribution” system? The only thing social credit would change is the ability of banks to create money out of thin air and then expect to paid more than the principle for, essentially, doing nothing except using their monopoly on a power (creation of money) which really belongs to society as a whole.

I am glad that you are entertaining my errors.

You have written “Nothing about the market changes under social credit.” And yet you also state that “the only thing social credit would change is the ability of banks to create money out of thin air and then expect to paid more than the principle […]” [my ellipsis]. I presume that in your social credit model does not diverge from capitalism except that currency, futures, and national bond trading, as well as quantitative easing and stimulus, would be prohibited. Would a social credit system also revert to commodity currency (i.e. a metallic standard) to curb the speculative ability of fiat currency? If dividends are to be created and paid back to workers without usury, then financially speculation is ostensibly legally prohibited. Social credit is “closed” so far as the system can’t adjust the monetary supply if the citizen-shareholders-workers in the social system can’t produce and consume enough to not only maintain production but also provide living wages.

Again, enter the DDR. The Ostmark was non-convertible, unlike the world-class Deutschemark of then-West Germany. Like the USSR and all Comecon countries, the DDR was centrally planned. Because the Ostmark was not traded on forex, and the DDR did not sell bonds to finance its economy, there was no way to leverage the economy and monetary supply. Because of this, the East German government extorted hard currency from western European and American travelers (i.e. minimum daily DM to Ostmark exchanges). The point is: no economy, and therefore currency, can meet demands without inter-economic speculation and interest. Without an open speculative economy, no other country will invest in a nation. Leninism-Stalinism has tried closed economic systems. This just doesn’t work in practice.

Heck, you know Angela ‘n’ the crew are resigned to the fact that after the Grexit billions of € are going to disappear into Greece’s black market (will there be a legitimate market in Greece when the drachma returns?) Greece’s inevitable near-exclusion from the bond and currency markets after the “nea drachma” will be a very unfortunate but illustrative example of my point.

http://renegadetrad.blogspot.com A Sinner

“I presume that in your social credit model does not diverge from capitalism except that currency, futures, and national bond trading, as well as quantitative easing and stimulus, would be prohibited.”

Only inasmuch as any of these things involve the creation of debt-money at interest by (private) banks.

However, I do suspect that such abstract financial practices would become less appealing and less possible as distribution of capital changed (and became more equal) in response to social credit.

“Would a social credit system also revert to commodity currency (i.e. a metallic standard) to curb the speculative ability of fiat currency?”

What?? No. Social credit is very much against the idea of a gold standard or anything like that. The money supply in social credit is structured in such a way that consumption exactly pays for production by a simple arithmetic.

“If dividends are to be created and paid back to workers without usury, then financially speculation is ostensibly legally prohibited. Social credit is ‘closed’ so far as the system can’t adjust the monetary supply if the citizen-shareholders-workers in the social system can’t produce and consume enough to not only maintain production but also provide living wages.”

It “adjusts the money” supply by making consumption always pay for production. That’s the whole point.

The dividend is not a guarantee of a living wage necessarily, though in our modern world it would function that way practically. If people’s needs simply aren’t met by production, if the total wealth of necessities divided by the number of people does not equal enough to live on per capita…well, financial speculation won’t solve THAT (and, at that point, we have much bigger problems!)

But, in truth, we’re living in an age of abundance with more than enough for everyone, and the only problem nowadays is distribution. We just need to make financially possible what is physically possible. We need to make products and needs meet, which is a monetary/distributive question.

“The point is: no economy, and therefore currency, can meet demands without inter-economic speculation and interest.”

The world as a whole must needs be a closed system, and social credit might ultimately propose a world-wide currency so that equal distribution is not limited to any one nation, but ultimately distributism for the whole world.

The money supply in social credit IS flexible. It’s nothing if not flexible, that’s the whole point. It’s a simple “accounting” system for making consumption pay for production.

You are speaking here the language of the capitalists who burn crops while hungry people watch.

Rat-biter

“Capitalism is economically inequitous at a basal level, but it is certainly preferable to the Stalinist New Man.”

## Is the difference anything more than one of degree ? Stalinism may be more *spectacularly* iniquitous, but capitalism is liable to criticism for many of the same reasons. Wage-slavery under capitalism may not be as visible as the enslavement of a country by a Stalinist *coup d’etat* – but while some philosophical positions may allow one to excuse or justify or encourage wage-slavery, Christianity, if it is Christian, doesn’t allow that. Christian faith, if it is to be genuine, has to be applied to all aspects of life; not to some or most. Is capitalism Christian ? I don’t see how it can be. STM that it is far inferior to the communism of the Jerusalem in the early chapters of Acts. Some of the Fathers would have a fit if they were to see the justifications of private property advanced by Christians: for some of them deny there is such as private property. I believe they are right, and faithful in that to the teaching of the NT.

STM Christians would not be capitalists, if (1) we were not so able at justifying injustice – (especially our own !); (2) if we were determined enough to conform all our ways of thinking & acting to how we know we ought to live. ISTM that at present, Christians are conniving with something very hard to escape from that is not worthy of what we profess to believe. One example: *If* Matthew 6 is applicable to Christians, & as James 4 definitely is: what happened to “take no thought for the morrow” ? How can we obey that, if we have bank accounts ? To have a bank account is to trust, not in God (Whom we call “Our Father”)’s goodness, but in paper and coin, that corrupt, can be stolen, and pass away. How is that Christian behaviour ? This post is most definitely directed at its poster as much as at anyone. If Jesus’ teaching is still valid, one has no business trying to pretend one is somehow exempted from its demands. This is why the ancient distinction between “evangelical counsels” & “the precepts of Christ” seems just a bit too convenient. If faith in Christ does not rule over our pockets, why bother with any other part of it ?

(In case that seems like “preaching”, it’s not; seem people are preachy in manner, unattractive as that can be :shrug: Just clarifying.)

http://undeetmemores.wordpress.com Jordan

Rat-biter [August 24, 2012 7:30 pm]: Is the difference anything more than one of degree ? Stalinism may be more *spectacularly* iniquitous, but capitalism is liable to criticism for many of the same reasons.

Quite true. However, the point I attempted to make in my criticism of social credit (c.f. Jordan [August 24, 2012 7:33 pm]) is that politically controlled usury is not an oxymoron but a necessary and hazardous catalyst of socioeconomic growth. Paul Ryan-randianesque “burn the 99” capitalism isn’t the Christian solution. Even so, capitalistic usury provides alternate means to augment economic growth when hedged by prudent legislative barriers (e.g. Glass–Steagall). A usurious society can be Christian-just iff the usurious trading of bonds and currency is directed towards the commonweal and not traders’ wallets. This is a fine balance which in postmodern democracies always bears the risk of dissolution. Electorates are free to elect patently immoral exploiters of potentially just economic models.

I am a social democrat, but not a socialist. There is a difference. Socialistic economic nationalization (i.e. Soviet central planning, social credit) is not just since it in fact further impoverishes a people through economic stagnation. Social democracy balances the risk of usury with the moral and ethical imperative of government welfare.

http://renegadetrad.blogspot.com A Sinner

“politically controlled usury is not an oxymoron but a necessary and hazardous catalyst of socioeconomic growth.”

Bah. The only catalyst of economic growth is REAL production, not finance. Technological improvements, social collaboration.

We have the production-capacity now. Why should “finance” (or concerns about “full employment”) ever get in the way of maximizing it??

“A usurious society can be Christian-just if the usurious trading of bonds and currency is directed towards the commonweal and not traders’ wallets.”

No. Credit belongs to the nation as a whole (some might argue: humanity as a whole), and it is theft for any private individuals to charge the nation for the credit which belongs to it in the first place. Not Christian.

Trellis Smith

While I believe yor criticisms of social credit are valid in the concern for an apparent lack of flexibility. The truth of social credit as originally conceived by Douglas has anticipated much in he development to the present monetary policy wherein the creation of wealth is expressed by an increase in public debt. Douglas social and economic philosophy is based on the greatest concern for individual freedom from institutional control but operating in a canon for the common good. I feel it cannot be dismissed so readily as socialism but remains well within the concerns of a social democratic theory. I am particularly drawn to his concept of the aristocracy of producers and the democracy of consumers.

Trellis Smith

In a more direct reply to your critcism, the whole impetus of Douglas’ social credit was his realization of the stagnation of the gold standard and his recognition of the value of the productive capacity of labor constrained by monetary abstractions. His was a truly reality based incarnational understanding of economic value seeking to liberate the economy’s potential and far from the impoverishing aspects of monetary policy which is what we are experiencing today.

http://undeetmemores.wordpress.com Jordan

re: Trellis Smith [August 25, 2012 2:15 pm]: Trellis, might you suggest a primer on Tommy Douglas’ and CCF/NDP economic theory ? As mentioned, I already have a huge respect for Douglas as an example of a “Christian political missionary” for lack of a better term, despite certain reservations about the viability of social credit today.

I will desist from my persistent pseudo-socratic questioning about social credit and will make time to read about its development (especially in Canada).

http://renegadetrad.blogspot.com A Sinner

Another person familiar with C.H. Douglas and Social Credit!!

Indeed, debt is the big issue. Ever-increasing production should not require ever-increasing debt! That’s an obvious financial flaw. Make what is physically possible financially possible!

What got me was the explanation that “full employment” is a ridiculous goal. Production doesn’t exist to “create jobs,” it exists to produce! And if it did this without employing a single individual, it would still be meeting its end!

Obviously, in fact, this is sort of the goal: to someday have technology be accomplishing all production and as many services as possible. But humans can’t all be physicians or attorneys! So we need a method of distribution that takes into account less and less employment.

The “asymptote” we have to imagine moving towards economically is a big machine at the center of the earth with outlets in every house that can make anything you need or want (including the food, etc), with distribution accomplished by inserting money as tickets distributed equally each year to all people based on how much the machine can make sustainably from the resources it draws from the earth (or, eventually, the unlimited matter and energy of outer-space…)

Obviously, as I said, this is an “asymptote,” but we’re closer to this sort of laborless near-superabundance than some would think, and our economy NEEDS a mechanism for distributing purchasing power in addition to wages that gradually replaces the wage more and more as labor is needed less and less (yet WITHOUT the absurd idea of taxing the rich to re-distribute the wealth which only creates vicious dependency; we need the purchasing power newly created and distributed correctly in the FIRST place.)

For so many Americans today, to talk, as the Catholic Magisterium does, of the just sharing of wealth flies in the face of our look-out-for-#1, do-it-yourself, dog-eat-dog, laissez-faire capitalist, greed-is-good, Randian Weltanschauung. It is denounced as socialism (an intrinsic evil, according to the Most Rev. Robert Morlino), Marxism, and class warfare. And yet so much of our governmental system has, for a long time now, contradicted this libertarian attitude through progressive taxation and entitlements. I can only hope that common sense, and a sense of social justice and Christian compassion and mercy, will in the end prevail and keep libertarianism at bay.

Rat-biter

Romans 12.2 comes to mind:

“And do not follow the customs of the present age, but be transformed by the entire renewal of your minds, so that you may learn by experience what God’s will is–that will which is good and beautiful and perfect.”

Since nothing belongs to us, by nature or by grace – what foundation can there be for “private property” ? Besides, sharing what has come our way reflects our shared membership in the body of Christ. It make no sense for us to claim to have material goods as “private property” (!), when we claim to share in the One Spirit & in all His good things. Talk about “cognitive dissonance” !

I blame the lingering influence of OT ideas of property as evidence of God’s blessing. But OT ideas have to be renewed and corrected by what is revealed in Christ. Even in the OT, the idea of property as evidence of God’s blessing is challenged, e. g. by the Book of Job. Secularised, God-free Calvinism is no basis for *Christian* living. They are radically, absolutely, incompatible. Somehow, if we are Christians, we *have to* stop trying to be Christians on a non-Christian basis. The two don’t mix.

Trellis Smith

@Jordan and A Sinner, You maybe surprised to hear that social credit legislation was passed in the House during the Gret Depression. I was exposed to Douglas and social credit a while ago in a monetary theory class and it always stuck with me and most recently I became reinterested because of the financial meltdown. Are we not struck at the absurdity where nothing has changed in the ressource or production capacity of a nation but for want of paper money people can lose their livliehoods and nations their sovereignty? My concerns are on the technical aspects of monetary policy that may lead into the radical yet rational aspects of social credit. First and foremost is to contain the new financial instruments (CDOs, unregulated derivatives)to lessen the systemic risk. There should be an absolute separation between the transactional currency associated with checking accounts and commercial paper known as reserve accounts and deposit accounts associated with all loans or speculative trading. Beyond Glass Stegal, there would be no guarantee of non reserve deposits and these private banks would then be allowed to fail without endangering the merely transactional monetary system. Secondly for the purpose of financing major national endeavours be it wars or substantial public works the Government should create its own interest free currency without resorting to the private banks. This is what Lincoln did to finance the Civil War.

http://renegadetrad@gmail.com A Sinner

“Are we not struck at the absurdity where nothing has changed in the ressource or production capacity of a nation but for want of paper money people can lose their livliehoods and nations their sovereignty?”

Not even paper money. Even just “book money,” figures on ledgers, could solve it.

Indeed, it is absurd. The fields have not burned, the factories have not all been bombed, labor has not all disappeared due to some plague. And yet “finance” can mess everything up when there has been no concrete material change. It is ridiculous, which is why we need Social Credit money.

“Secondly for the purpose of financing major national endeavours be it wars or substantial public works the Government should create its own interest free currency without resorting to the private banks.”

I tend to think wars are largely the RESULT of the debt-money system.

I think it is also imperative to un-bootstrap employment and income.

Trellis Smith

@ A Sinner. Essentially I agree and appreciate the asymptotic arrival you describe. The approach I favor is simply a waystation on that asymptote, and a return from the spun sugar of the newly created tools of finance wherein usury has attained new heights of irrationality. Your big machine is not at all farfetched as today I can order what I want with my computer and have it arrive on my doorstep.(granted the ease belies the effort entailed)

The disassociation of labor and income cannot be accomplished without a paradigm shift. Presently however income must rise to boost consumption on track with production. As this could not be deployed by the individual corporation due to competitive disadvantage the social dividend could be paid out from the treasury at this time only to the employed who participate in the generation of the social dividend. Once the economy is fully functioning and employment has peaked the social dividend could be used as a meaningful unemployment insurance.

Apologies for my typos in my replies but my computer skips almost everotr* letter (* every other letter) in this box

http://renegadetrad.blogspot.com A Sinner

“the social dividend could be paid out from the treasury at this time only to the employed who participate in the generation of the social dividend”

I’m not sure why you say this.

We are ALL heirs to the enormous social capital, which is the greatest factor in production today, even when we don’t personally participate. No man owns the Time or the Rain or Sunlight that God has sent. No man owns the collective heritage of mankind’s technological knowledge (once patents have expired). And most importantly, no man owns the social network or web of civilization itself, on which relational-network Credit itself is based!

Obviously, at the current time, the social dividend could not be so high as to have everyone simply leave labor or production. It would have to be simply an equal distribution of the new necessary purchasing power. But there would have to be an “equilibrium reached.” Presumably, if too many people LEFT their jobs to live purely off the dividend…then production would drop, and so the dividend based on that production would likewise drop, and so that would then force some people to RE-enter the labor-market to supplement their dividend with a wage, and so production would rise again, etc etc until an equilibrium in that regard was reached. Over time, less and less labor would be needed to produce the same (or greater!) amount of real goods, and the dividend would become a higher and higher proportion of total income versus the wage.

Chris Sullivan

Thanks for a great post MM !

God Bless

Jordan

Chrysologus [August 22, 2012 12:44 pm]: I can only hope that common sense, and a sense of social justice and Christian compassion and mercy, will in the end prevail and keep libertarianism at bay.

The United States will have to suffer the purgatory of a christianist/dominionist/randian administration before the American people realize the great value of a secular and social democratic republic. Robert Lewis, the co-pilot of the Enola Gay, wrote a decade after Hiroshima, “My God, what have we done?” (Interestingly, David Byrne didn’t coin this phrase). I am convinced that relatively few Americans will truly realize the great destruction a christianist administration will visit on our nation until secular protections are suppressed. If these perils were truly understood, more would readily defend a secular republic.

This potential situation might be quite similar to the Iranian Revolution. Most Iranians were desperate to escape the plutocratic Shah and his brutal Savak secret police. While secular and more affluent Iranians did not necessarily mind the Shah’s Gaullist laicite, less affluent Iranians often chafed at the forced exclusion of Islam from the public square. The Shah’s unwise decision to force a “western” social policy on a largely religious population was perhaps just as damaging as his bald economic victimization of Iranians. Even so, a popular embrace of islamism merely forced Iran into an opposite direction of rights-violation. Similarly, I suspect that many Americans who are greatly angered by American left-center administrations’ more secular policies (e.g. abortion on demand and same-sex-marriage) don’t quite grasp that christianism will also deprive them of many other civil rights. Are these deprivations worth the ability to more freely express Christianity in the public square? Few are asking this last question.

A Sinner [August 29, 2012 10:24 am, transferred]: I think it is also imperative to un-bootstrap employment and income.

I hope you have your name on the Trabant waiting list. The inverted fiberglas bathtub on wheels only goes 100 km/h after 25 excruciating seconds. Speed-limited to 62 mph, but who would want to risk their life in one of those at any speed? At one point, hapless Prussian proletarians waited up to two decades to get theirs.

What I’m getting at is this: one of the deleterious effects of a disjunct of employment and income is a grossly distorted consumer economy. (I don’t mean to pick on the DDR. It’s just that it’s full of great examples of what not to do re: planned economy.) Sure, everyone in the workers’ paradise was guaranteed a job and salary. It’s just that not everyone had a productive job or was paid a wage commensurate with their productive potential. The East Germans allocated labor and production according to an idealized ‘equitable’ distribution of employment, income, and product consumption. Hence the prole queue-up for a Trabbi; the nomenklatura could often buy a western european car despite the “rules”. The desire to control every aspect of economic life resulted in gross labor mismanagement, poor quality control, and an idle, unmotivated workforce. What was the point of working hard with an aim for advancement if salary negotiation was unconnected to production or profit? If Trabbis were not sold on the open market, but rather allocated, then what was the impetus to produce a quality product? Central economic and consumer planning eventually produces a static environment where labor, wage, and product stagnate and eventually degrade living standards.

http://renegadetrad.blogspot.com A Sinner

Again, you keep knocking down some sort of socialist/communist straw-man. Social credit has nothing to do with a planned economy or with “guaranteeing everyone a job.” It does guarantee a dividend separate from any wages or employment through how the new purchasing power (to represent new production) is distributed.

Trellis Smith

I’ll let A Sinner rebutt the details I would just say on one hand I believe you continue to confuse socialism with social credit when in fact social credit seeks to make everyone a capitalist on the other you are correct in recognizing that there would be a paradigm shift that really questions our present social makeup and relations. But social credit itself is no more onerous then a bookkeeping system plus a national bureau of statistics and not a social or political organizing principle perse However the ramifications are quite astounding to our present mode of thinking and the societal effects are worth pondering. I’m not sure why you think you it leads to centralized planning when it seeks the opposite effect.

http://renegadetrad.blogspot.com A Sinner

Right, it seeks to give EVERYONE our share in the social capital, as you say: make everyone a “capitalist” as it were. Even the bureau of statistics wouldn’t have to be THAT accurate. A basic estimate of GDP would be a good start, and would only have to be correct within a margin of error that would probably be very forgiving.

Trellis Smith

@ Jordan As far as a primer on Social Credit you requested there is much on the web. As far as the Alberta experience which actually had a Social Credit party,, no social credit policies were enacted as they were stymied by the Courts. One book looks like a promising read: The Political Economy of Social Credit and Guild Socialism Frances Hutchinson, Brian Burkitt – 1997 – 197 pages perhaps you can find something there re: Social Credit & Socialism

Jordan

re: Trellis Smith [August 30, 2012 2:21 am]: Thank you for your reading suggestions. I will not speculate further until I read through some of these books.

re: Trellis Smith [August 29, 2012 10:20 pm] & re: A Sinner [August 30, 2012 9:58 am]: I mentioned Trabant production and distribution only to illustrate the economically self-destructive aspects of a closed economy (particularly the death of corporate innovation). How could a social credit society foster corporate innovation while promoting GDP reinvestment in the form of citizen dividends? I am not convinced that “pure” social credit — abolition of “usury” (e.g. corporate or government bond speculation) in favor of social dividend — can also accommodate market growth. Corporations for example would be severely limited in their ability to raise capital to grow.

Sometime, I would like to start a blog solely to explore the ramifications of social credit. Vox Nova isn’t the place for discussions such as these. I apologize to Morning’s Minion for the belabored points.